Sri Lanka is stepping up efforts to position itself as South Asia’s digital gateway, courting Japanese investors to join a landmark initiative a proposed neutral AI Data Centre designed to serve the region.

The announcement came this week in Tokyo, where Chief Presidential Adviser on Digital Economy Dr. Hans Wijayasuriya, addressing a business and investment forum chaired by President Anura Kumara Dissanayake, extended an open invitation for Japanese participation in the project.

Dr. Wijayasuriya described the data centre as a virtual Special Economic Zone (SEZ) that would grant data sovereignty to all participating nations while offering attractive concessions for investors, including energy usage incentives.

He emphasized that the centre forms part of the Government’s broader plan to expand the digital economy fivefold to US$15 billion by 2030, with a goal of tripling digital exports to US$5 billion and growing the digital workforce to 200,000 over the next five years.

According to the proposal, the facility will ensure that countries using the platform retain ownership and control of their data a critical factor in the emerging digital era where information is both an asset and a vulnerability.

 For investors, Sri Lanka promises not just favorable conditions but also a strategic location and policy environment aimed at building a competitive hub for digital services in South Asia.

Analysts note that the initiative could deliver several long-term benefits if executed effectively. A regional centre that guarantees data sovereignty would enhance trust among partner nations and encourage greater cross-border collaboration.

With Japan’s technological expertise and capital, Sri Lanka could attract significant foreign direct investment (FDI), modernize its infrastructure, and create new high-skilled employment opportunities in cloud computing, cybersecurity, and AI-driven services. The project could also strengthen the country’s export profile by enabling local firms to develop digital products and services for international markets.

However, the plan comes with substantial challenges. Data centres are notoriously energy-intensive, and ensuring uninterrupted, low-cost, and sustainable electricity will be essential. Despite government assurances of concessions, energy infrastructure upgrades and reliable power generation remain prerequisites for investor confidence.

In addition, Sri Lanka must deliver world-class digital infrastructure, including ultra-fast connectivity, resilient cooling systems, and secure data handling practices that meet global compliance standards.

Another concern is the skills gap. While Sri Lanka has made strides in ICT education, it still faces shortages in advanced AI engineering, data science, and digital governance expertise. Closing this gap will require significant investment in education and workforce training to support operations and attract high-value tenants.

The project’s return on investment (ROI) is also uncertain in the short term. Building such a facility demands heavy capital expenditure on land, construction, and energy systems, while revenues depend on strong regional demand and sustained policy stability.

 If successfully implemented, the centre could generate FDI inflows, high-skilled jobs, tax revenue, and technological spillovers across multiple sectors. Yet, delays in execution or policy inconsistency could erode investor trust and limit returns.

From a strategic perspective, the proposal is timely. Global tech firms and governments are increasingly seeking neutral, trusted locations for data hosting amid rising concerns over privacy and geopolitical rivalries. Sri Lanka’s vision aligns well with this trend and could strengthen its position as a regional digital hub. But success will depend on careful planning, transparent governance, and strong partnerships with technologically advanced nations like Japan.If managed effectively, the neutral AI Data Centre could become a cornerstone of Sri Lanka’s digital transformation fostering innovation, enhancing regional cooperation, and cementing the country’s role in the global AI economy. But the true measure of its success will lie not in the ambition of its design, but in the precision and consistency of its execution

Sri Lanka’s tourism industry recorded its highest-ever September arrivals this year, fuelled largely by visitors from India, giving the sector a timely boost ahead of the crucial winter season. The strong performance has revived optimism, though concerns remain about falling short of the Government’s ambitious 2025 targets.

According to the Sri Lanka Tourism Development Authority (SLTDA), 158,971 tourists visited the island in September 2025 a 30.2% year-on-year increase and a new record for the month, surpassing the previous high of 149,087 in 2018. The surge was driven by a steady rise in Indian travellers, whose numbers grew 7% month-on-month, reaffirming India’s position as Sri Lanka’s largest source market.

On average, the country welcomed 5,299 tourists per day, reflecting a 30.13% jump compared to last year. India accounted for 49,697 visitors or 31.3% of total arrivals, followed by the United Kingdom (6.8%), China (6.6%), Germany (5.9%), and Australia (5.7%). Other key contributors included France, Bangladesh, Spain, the Netherlands, and Japan, underscoring the growing diversity of Sri Lanka’s visitor base.

The strong September turnout pushed total tourist arrivals for the first nine months of 2025 to over 1.72 million, representing a 16.2% increase compared to the same period in 2024. However, the figure remains marginally below the pre-crisis benchmark year of 2018, when arrivals by end-September had already reached 1.73 million. India continued to dominate the top source markets with 375,292 visitors, followed by the UK, Russia, Germany, and China.

Industry analysts attributed the record arrivals to heightened global attention following multiple international accolades. Sri Lanka was recently named the No. 1 Most Beautiful Island in the World by Big 7 Travel, ranked ninth on BBC Travel’s list of 25 Best Places to Visit in 2025, and declared the top destination for October 2025 by Time Out magazine. These recognitions, combined with rising interest in meetings, incentives, conferences, and exhibitions (MICE) tourism, have helped restore confidence in the industry.

Despite the positive trajectory, September arrivals fell short of SLTDA’s forecast of 185,000 by around 26,000 visitors, a 16.4% gap. For the January–September period, the target had been 2.19 million visitors, meaning actual numbers were 27.4% below expectations.

In its latest “Growth Scenario” report, the SLTDA projected three possible outcomes for the year. Under the base case, average monthly arrivals of 280,000 from August to December would result in 2.78 million visitors — a post-crisis high but still short of the original 3 million target. The optimistic scenario, requiring 330,000 monthly arrivals, could bring the target within reach, but only with swift visa reforms and intensified global marketing. In contrast, the pessimistic scenario foresees a total of around 2.6 million visitors now informally accepted as the revised target.

Confirming this shift, SLTDA Chairman Buddhika Hewawasam recently acknowledged that Sri Lanka is now aiming for at least 2.6 million arrivals this year. He described this as a “historical high,” surpassing the pre-pandemic record of 2.33 million tourists in 2018. To meet the revised goal, the country will need to attract roughly 875,000 visitors in the final quarter of 2025.

Tourism earnings have also shown resilience. According to the Central Bank, the sector generated $2.3 billion in the first eight months of 2025, up 5.7% year-on-year. Although this remains below the Government’s $5 billion annual target, analysts expect total revenue to exceed last year’s $3.17 billion, the highest since 2018.

Industry stakeholders remain cautiously optimistic. While Sri Lanka may not reach its original 2025 ambitions, they say the sector’s recovery is unmistakable — bolstered by strong seasonal prospects and global recognition. However, they warn that sustaining this growth will require a robust international promotion campaign and an expedited visa-free entry programme, ensuring Sri Lanka remains a preferred destination in an increasingly competitive regional tourism landscape

The Consumer Affairs Authority (CAA) has announced that all reusable plastic bottles and polymer-based feeding bottles will be required to carry Sri Lanka Standards (SLS) certification from April 1, 2026, under a new directive issued through an Extraordinary Gazette on October 1.

The regulation bars manufacturers, importers, distributors, and traders from producing, importing, transporting, storing, or selling such bottles without the official SLS certification mark.

The order applies to two categories:

• SLS 1616 – Specification for Reusable Plastic Bottles for Drinkable Liquids
• SLS 1306 – Specification for Feeding Bottles Made of Polymer Materials

Imported products must undergo inspection and approval by the Sri Lanka Standards Institution (SLSI) under its Import Inspection Scheme.

Signed by CAA Chairman Hemantha Samarakoon, the directive was issued under the Consumer Affairs Authority Act No. 9 of 2003 and the Imports and Exports (Control) Act.

Officials said the measure aims to enhance consumer safety, curb substandard plastic products, and align local practices with international standards.

Sri Lanka’s top anti-graft official Ranga Dissanayake, Director General of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC), has dismissed allegations of his involvement in active politics as “completely false,” calling them part of a campaign to tarnish the Commission’s credibility.

Dissanayake, a serving High Court judge on secondment, stressed that his duty is to uphold CIABOC’s mandate “without fear or favour.” The Commission, emboldened by the 2023 anti-corruption law, has recently accelerated prosecutions, mostly targeting opposition politicians and public officials.

Responding to claims that he was once linked to the JVP, the DG denied any political affiliation, saying: “It is very clear the motive is to tarnish the Commission’s image.”

He also highlighted severe resource shortages, noting that the Commission has only 169 investigating officers and 31 legal officers, compared to a requirement of 967, with Treasury restrictions blocking new recruitment.

The NPP government of President Anura Kumara Dissanayake has positioned its anti-corruption drive as a central pillar of governance.

Prime Minister Dr. Harini Amarasuriya called on citizens to take collective responsibility in protecting the environment and ensuring that future generations inherit a sustainable Earth.

Speaking at the inauguration of the “Soba Sipwadula” Project at Colombo Hindu College, Ratmalana, she said tree planting should not be seen as a symbolic act but as a duty to nurture and preserve them for the future.

As part of the launch, the Prime Minister planted a jackfruit sapling while schoolchildren planted 100 saplings within the premises. The programme, carried out under the Clean Sri Lanka initiative by the Sri Lanka Hadabima (Heartland) Authority, will create green zones in 50 schools and was simultaneously rolled out across the other eight provinces.

The Prime Minister underscored the importance of sustainable development, warning against environmental pollution from plastics and toxins.

“Humans destroy the environment, but it is also humans who can protect it. Let us build a society that safeguards our environment,” she said.

The event was attended by Members of Parliament, senior officials, and representatives of the private sector.

The Department of Meteorology announced that atmospheric conditions are becoming favorable for evening thundershowers in most parts of the island.

Showers or thundershowers are expected at several locations across many provinces after 1.00 p.m.

Fairly heavy showers, exceeding 50 mm, are likely at certain places in the Northern, North Central, and Eastern Provinces, the Met. Department added.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.

In a landmark policy shift effective today, the Inland Revenue Department (IRD) has scrapped Sri Lanka’s long-standing Simplified Value Added Tax (SVAT) scheme, replacing it with a new risk-based VAT refund system designed to improve efficiency and transparency.

The move is part of  wider tax reforms aligned with IMF-backed fiscal restructuring, but it has triggered serious concerns from the country’s export community over potential cash flow disruptions.

According to the IRD, the new refund mechanism aims to deliver VAT refunds within 45 days of filing, contingent on each taxpayer’s “risk rating.”

Taxpayers will now be categorized as low, medium, or high risk, based on statistical assessment. Low and medium-risk entities will receive refunds without prior verification, while high-risk taxpayers must undergo checks before claims are processed.

The scheme primarily targets exporters and strategic projects, including those under Section 22(7) of the VAT Act, and suppliers to designated Special or Strategic Development Projects, provided these account for at least half their total sales.

The IRD insists the reform will curb fraud, enhance accountability, and make refunds more predictable. Any discrepancies in submissions, however, will suspend the refund timeline until corrections are made a move that could stall liquidity for some firms.

The outgoing SVAT scheme, introduced in 2011, has long been a pillar of Sri Lanka’s export incentive framework, enabling smooth operations by offsetting input tax without upfront payments.

Yet, it has faced criticism for enabling tax evasion and fraud. The IRD points to historical cases including the early 2000s VAT scandal, when fraudulent refund claims cost the Treasury over Rs. 357 million  to justify the overhaul.

Despite these intentions, exporters warn of a looming crisis. At a recent industry briefing, leading associations representing apparel, IT, rubber, and spice sectors warned that without a fully tested refund system, the transition could lock up nearly 8% of export revenue, or about $80 million monthly, severely straining cash flows.

They argue that while reform aligns with global best practices, the lack of administrative readiness could undermine the sector’s $19 billion export goal for 2025.

Tax experts acknowledge the strengths of a risk-based model faster refunds for compliant taxpayers and reduced fraud exposure but caution that its success depends on the IRD’s capacity to manage verification efficiently. Delays or misclassifications could disproportionately penalize exporters, the backbone of Sri Lanka’s foreign exchange earnings.

Ultimately, while the reform reflects a push for modern, transparent taxation, its rollout will test whether Sri Lanka can balance compliance, efficiency, and business confidence in a fragile economic recovery.

Colombo, Oct. 1 – In a landmark step for sustainable finance, DFCC Bank has launched Sri Lanka’s first-ever Blue Bond, a Rs. 3 billion issuance dedicated to protecting marine and coastal resources.

The bond, expected to receive an ‘A(EXP)(lka)’ rating from Fitch Ratings, will fund projects including clean drinking water systems, sustainable fisheries and aquaculture, renewable ocean energy, eco-friendly coastal tourism, wastewater management, clean marine transport, and climate adaptation for coastal communities.

Aligned with the International Capital Market Association’s Green, Social and Sustainability Bond Principles and emerging Blue Bond guidelines, the issuance emphasizes transparency, measurable impact, and clearly defined use of proceeds.

Nearly 30% of Sri Lanka’s population lives in coastal areas, heavily reliant on fisheries, tourism, and maritime trade. DFCC Bank said the Blue Bond reflects a national commitment to safeguarding ecosystems and supporting communities dependent on ocean resources.

The move follows DFCC’s successful launch of Sri Lanka’s first Green Bond in 2024, extending its sustainability journey “from land to sea.”

DFCC CEO Thimal Perera called the issuance a milestone:

“Finance can change the course of a nation – and with this Blue Bond, we are showing it can also change the course of our oceans.”

With this pioneering step, Sri Lanka joins an exclusive group of nations, including Seychelles, Fiji, Ecuador, and Indonesia, that have tapped capital markets to protect marine ecosystems.

Marking its 70th anniversary, DFCC reaffirmed that economic growth and environmental stewardship can go hand in hand, positioning the Blue Bond as a model for integrating sustainability into Sri Lanka’s financial system.